Friday, March 10, 2017

EAC residents ‘out of Vodacom IPO for now’



By The Citizen Reporter @TheCitizenTz

Dar es Salaam. The participation of residents from other East African Community member states in the initial public offer of Vodacom Tanzania may be subject to approval by the Bank of Tanzania after the telecom companies said it would give priority to Tanzanians and Tanzanian institutions.

Vodacom looks forward to raising Sh476 billion in the IPO that started yesterday, but concerns have been raised whether all 560 million shares, which are up for grabs, will be taken if only Tanzanians are allowed to participate.

The telecom company says in its prospectus that priority will be given to Tanzanians in the allotment of shares.

“Directors have resolved that all Tanzanians and Tanzanian institutions that applied and qualified will receive the full number of shares applied… [but] in the case of oversubscription by Tanzanians and Tanzanian institutions the offer of shares will be allotted on a pro rata basis, the prospectus reads in part.

Officiating at the launch of the IPO yesterday, Vodacom officials said they would be in constant consultations with the authorities and would seek to take the IPO to investors from other EAC member states or extend the deadline in case it is undersubscribed.

Section 3(1) of the Capital Markets and Securities (Foreign Investors) Regulations, 2014 allows foreigners to both participate in the IPOs and in the Dar es Salaam Stock Exchange. But section 3(2) allows the BoT to put conditions/restrictions or requirements as it may deem fit. Experts have expressed concerns that barring non-Tanzanians to participate in the IPO, the largest in the history of public offerings may lead to under-subscription as it happened in the Precision Air IPO in 2011 was undersubscribed by Sh21.1 billion ($10.1 million).  Experts’ concerns about undersubscription were justified by liquidity problems in the economy that bedevilled the country in the whole of 2016. 

But the central bank moved decisively to ease liquidity by reducing the BoT’s discount rate from 16 to 12 per cent with effect from March 6, 2017.